Pav-Saver Corporation v. Vasso Corporation

Illinois Court of Appeals493 N.E.2d 423 (1986)

Facts

Pav-Saver Corporation (plaintiff) entered into a Partnership with Vasso Corporation (defendant) to manufacture and sell paving machines. Pav-Saver contributed certain intellectual property to the Partnership. Pav-Saver’s principal would manage the operation. The partnership agreement stated that the partnership would be permanent unless both partners agreed to terminate. The partnership agreement also stated that if one party terminated unilaterally, Pav-Saver would take back its intellectual property, and that the party not terminating would receive liquidated damages. Illinois had adopted the Uniform Partnership Act, which provided that when a partnership is terminated in violation of the partnership agreement, the non-terminating partners may continue the enterprise, as long as they pay the terminating partner the value of their interest, not counting good will value. Eventually, Pav-Saver terminated the partnership unilaterally. Vasso responded by taking over the Partnership’s operations, including retaining control over the intellectual property contributed by Pav-Saver. Pav-Saver sued to recover its intellectual property, and Vasso countersued for a declaration that it was entitled to the property. The trial court found that Vasso was entitled to retain control of the intellectual property and to liquidated damages.

Rule of Law

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Issue

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Holding and Reasoning (Barry, J.)

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